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Agencies Seek to Improve and Modernize Employee Benefit Plan Reporting

On July 18, 2016, the IRS, Department of Labor’s (DOL) Employee Benefits Security Administration and the Pension Benefit Guaranty Corporation issued proposed regulations that would significantly change filing requirements for Form 5500, Annual Return/Report of Employee Benefit Plan, as well as Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

Form 5500 is the primary source of information about operations, funding and investments of private-sector, employment-based pension and welfare benefit plans in the U.S. Under Titles I and IV of ERISA and the Internal Revenue Code (IRC), pension and other employee benefit plans are generally required to file annual returns/reports concerning the financial condition and operations of the plan. Filing a Form 5500 or Form 5500-SF, along with any required schedules and attachments, usually satisfies these annual reporting requirements.

According to a DOL news release, in the U.S, there are an estimated 2.3 million health plans, roughly the same number of other welfare plans and nearly 681,000 pension plans. These plans contain an estimated $8.7 trillion in assets which are used to cover about 143 million private-sector workers, retirees and dependents.

Why the proposed revisions? The intent, according to the release, is threefold:

  • Update/modernize employee benefit plan financial statements and investment information
  • Update reporting requirements for service provider fee and expense information; in particular, the proposed regulations would represent an attempt to synchronize annual reporting requirements with the DOL’s final disclosure requirements. This, in turn, would enhance the government’s ability to use data included in Form 5500
  • Improve compliance under ERISA and the IRC through selected new questions about plan operations, service provider relationships and the financial management of the plan.

Additionally, these proposed regulations would improve certification requirements for limited scope audit requirements under 29 CFR 2520.103-8, and they would also allow group health plans to use Form 5500 to satisfy specified reporting requirements in the Affordable Care Act (ACA). According to the DOL, proposed changes to the DOL regulations are needed to implement the form revisions.

Related: Preparing for an Employee Benefit Plan Audit: What Should I Expect?

Overall, the agencies stated a broad goal of transforming Form 5500 into a modern information collection tool while minimizing administrative burdens with respect to operation of plans.

These revisions would affect employee pension and welfare benefit plans, as well as plan sponsors, administrators and service providers. They would be subject to annual reporting requirements under ERISA and the IRC. Under the proposal, the form revisions would begin with the Plan Year 2019 Form 5500 series returns/reports.

In the DOL release, Phyllis C. Borzi, Assistant Secretary for the Employee Benefits Security Administration, said, “The proposed form changes and related regulatory amendments are important steps toward improving this critical enforcement, research and public disclosure tool. The 5500 is in serious need of updates to continue to keep pace with changing conditions in the employee benefit plan and financial market sectors. We must also remedy the form’s current gaps in collecting data from ERISA group health plans.”

These forms were last revised in 2007. The proposals were published in the July 21 edition of the Federal Register. The proposals and a Fact Sheet are also available on EBSA’s website at Publication of the notices in the Federal Register marks the start of a 75-day comment period.

Concluding Thoughts

According to the DOL release, Form 5500 information is open to public inspection, so expanded data collection would offer multiple benefits—specifically, it would assist in the agencies’ research and policymaking objectives and enable private sector and other governmental stakeholders to perform data-based research or help plan sponsors, fiduciaries, and participants and beneficiaries better understand their plans and plan investments.

Skoda Minotti will continue to monitor news and events surrounding Form 5500 proposed revisions, as well as all other employee benefit plan issues, and we will keep you apprised of the latest developments. Feel free to share this update with your HR and management teams to help them prepare for the proposed revisions. If you have questions, please contact me at or 440-449-6800.

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